Crude Oil Prices Rise for Third Week Amid Israel-Iran Conflict

Oil prices have been rising steadily for the past three weeks due to growing tensions between Israel and Iran. Although prices dipped slightly on Friday, Brent crude still saw a 3.9% weekly increase, trading at US$77.28 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude for July rose to US$76, with the more active August contract at US$74. 

The jump in prices was sparked by Israel bombing nuclear targets in Iran, followed by Iran launching missiles and drones toward Israel. These attacks have left investors nervous, especially with no signs of either side backing down.  

Strait of Hormuz at Risk 

One major concern is the Strait of Hormuz, a narrow passage near Iran through which about 20 million barrels of oil pass daily. If Iran blocks this strait, oil prices could shoot up sharply. While Saudi Arabia and the UAE offer alternate pipeline routes, they cannot fully replace the Strait's massive oil traffic.  

So far, oil supply from Iran—about 3.3 million barrels a day—has not been disrupted. But increased risks have pushed tanker rates and insurance costs by nearly 60% since the fighting began. 

Will Crude Oil Prices Hit US$80? 

Despite an 8% increase in oil prices over the last eight days and 23% in a month, many reports suggest that prices may not cross the US$80 per barrel mark soon. Currently, Iranian oil is already being sold at discounted rates, especially to China, due to long-standing sanctions. 

Uncertainty Around U.S. Involvement 

Adding to the uncertainty, the White House stated that former President Donald Trump will decide within two weeks whether the U.S. will intervene in the conflict. If that happens, there is a possibility of greater volatility in the crude oil market. 

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Conclusion 

The ongoing Israel-Iran war has put global oil markets on edge. While no major supply cuts have occurred yet, the threat of a blocked Strait of Hormuz and rising shipping costs could keep oil prices high in the coming weeks. Investors and countries alike remain watchful of any further developments. 

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